1993 (8) TMI 211 - AT - Central Excise

Summary

Issues: Application for dispensing with pre-deposit of duty and penalty under impugned order dated 17-2-1993.

In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, the issue at hand was an application for dispensing with the pre-deposit of duty amounting to Rs. 84,32,790.00 and a penalty of Rs. 10 lakhs as per the impugned order dated 17-2-1993 passed by the Collector of Customs and Central Excise, Bhubaneswar. The applicants contended that the demand for duty, made beyond the six months period under Section 11A of the Central Excises and Salt Act, 1944, was not justified as there was no suppression of facts on their part. They argued that the procedure followed by them for availing set-off of duty on MEG used as input in MMSF was well-known to the Department. The applicants also highlighted their financial distress, having been declared a sick unit with significant accumulated losses. On the other hand, the Senior Departmental Representative opposed the stay, emphasizing that the demand was made under Rule 9(2) of the Central Excise Rule, 1944, with reference to contravention of the Act provision to evade payment of duty. The Department argued that the applicants had ignored reminders from the factory officer regarding the prescribed procedures for availing exemptions. The Department also pointed out the financial liquidity of the applicants, indicating their ability to raise the pre-deposit amount.

The Tribunal carefully considered the submissions from both sides, particularly focusing on the limitation issue and the merits of the case. The Collector's findings revealed that the applicants had not followed the correct procedure for availing duty set-off under Notification No. 225/86-C.E., with an alleged intent to evade duty payment. The eligibility of the quantity exported for duty set-off was also questioned. The Tribunal observed that certain aspects differentiated the present case from precedents cited by the applicants. Considering the financial position of the applicants, as evidenced by their annual report and registration as a sick unit with the Board for Industrial and Financial Reconstruction, the Tribunal decided that a partial pre-deposit of Rs. 20 lakhs should be made by the applicants by a specified date. The penalty was dispensed with, and its recovery stayed. The Tribunal scheduled a follow-up date to ensure compliance with the pre-deposit directive.